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RE: Finance - What is EBITDA & Why it is Important - Lets Explore...

in TradFi20 hours ago

The table is a great way to show how Net Income and EBITDA differ. It’s funny how EBITDA gets called BS earnings by guys like Munger because it ignores the cost of replacing equipment, but it’s still the best way to compare companies in the same industry. That 'Simple Rule of Thumb' you shared is a perfect starting point for anyone looking at a balance sheet.

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Where did you read EBITDA being called as BS earnings? It is well understood by financial experts maintaining the balance sheet.

That came from Charlie Munger (Warren Buffett’s partner). Munger was always very vocal about how EBITDA can be used to make a struggling company look better

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